Yesterday, Dec. 29, Bloomberg Business reported that ride-sharing and delivery service Sidecar Technologies Inc. will close for good on Dec. 31, illustrating the importance of startup funding. Heavily-funded competitors Uber Technologies Inc. and Lyft Inc. squeezed out the car-hailing service, which was founded four years ago and the third-largest of its kind.
Sidecar hasn’t had an easy road; even though it developed one of the first apps for ride-destination tracking, discounted carpooling and deliveries, it struggled to compete with Uber and Lyft. Part of that had to do with the startup funding situations of the three companies. Uber has raised more than $12 billion in debt and equity, while Lyft has raised about $1 billion. By comparison, Sidecar only raised approximately $39 million, according to the Wall Street Journal.
As Uber and Lyft carved out more market share for themselves, Sidecar shifted to transporting goods – but even then, Uber still had a piece of that pie, and Postmates also transports goods. Sidecar never gained the same kind of traction with drivers as its competitors did, according to the Bloomberg Business article.
The blog post from Sunil Paul, Sidecar’s co-founders, lays out the innovations that Sidecar developed for the ride-sharing industry: Destination, turn-by-turn directions, Shared ETA, Shared Rids and Back-to-Back rides. Deliveries launched in February and included food deliveries via a partnership with food delivery app Eat24.
Startup funding, however, was what did in Sidecar. Google Ventures was one of Sidecar’s first investors in 2012, but in 2013 became the lead investor in Uber. Other investors included Lightspeed Venture Partners, Huron River Ventures, Lerer Hippeau Ventures and British billionaire Richard Branson. In 2014, Branson blogged that Sidecar would emerge victorious due to its ideas and innovation, not funding.
The lesson for startups is clear: funding matters. Whether you choose to go the crowdfunding route, work with venture capitalists, find angel investors, and/or take out traditional loans, having enough capital on hand is critical to seize market share. Even though Sidecar was innovative, it didn’t have what its competitors did: money.